Yesterday, gold prices tracked higher on market jitters and lower bond yields. XAUUSD opened at $1,462.98 and steadily traded higher to an intraday high of $1,474.36 before closing the day at $1,470.78. Yields on US 10-year Treasury bonds bonds dropped to their lowest level since November 7 at 1.80% yesterday which dampened demand for the US dollar.
However, today could be a different story for the safe haven asset. Risk appetite picked up in today’s Asian session tempering demand for the precious metal. It is down around $5 an ounce, trading around $1,465.00.
There have been no new updates on phase one of the US-China trade deal. With some stock indices hitting new multi-week lows, investors in today’s Asian session used this as an opportunity to bargain hunt in the equities markets.
News about China’s central bank, the People’s Bank of China (PBoC), taking a more active role in supporting economic growth also boosted risk appetite in the Asian session. It was announced earlier today that around 200 billion yuan was injected into the economy. This news came after yesterday’s disappointing Chinese data which hint at a slowdown in the world’s second-largest economy.
For today, direction on XAUUSD could hinge on the outcome of reports coming from the US. At 1:30 pm GMT, the headline retail sales report for October is estimated to show a 0.1% uptick. Meanwhile, excluding big ticket purchases, the core retail sales report is eyed to come in at 0.3%. Positive figures will likely be bullish for the US dollar because they would affirm the Federal Reserve’s optimism on the economy and their stance on monetary policy being currently appropriate.
XAUUSD is now trading below the inverse head and shoulders chart pattern that I pointed out yesterday. There was already a break of neckline resistance at $1,466.83, however, it would seem that there were not enough buyers in the market to sustain gold prices above this level.
It’s currently finding some support at the 38.2% Fib level from the low of November 12 to yesterday’s swing high. Should US data disappoint or if we hear about more complications about trade negotiations, XAUUSD could make a run for its November 7 highs at $1,472.78.
On the other hand, if risk appetite is sustained throughout today’s trading, the inverse and shoulders chart pattern could be invalidated. The next support level for XAUUSD is around its monthly lows at $1,445.67